Why bias challenges to administrative adjudication should succeed.

Author:Barnett, Kent
Position:Symposium: A Future Without the Administrative State? Exploring the Administrative State
 
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  1. INTRODUCTION

    How much confidence would you have in a judge whom your opponent hired, can pay bonuses to, and can seek to discipline or remove? If your answer is not much, then you best not interact with the federal government. I recently argued that numerous administrative adjudicators very likely suffer from an unconstitutional appearance of partiality because the agencies that are often parties in administrative hearings can hire, pay bonuses to, discipline, and remove these adjudicators. (1)

    In this Article for the Missouri Law Review's Symposium on A Future Without the Administrative State?, I contend that challenges to adjudicators' appearance of partiality are well positioned to be part of the new wave of structural challenges to the administrative state. Many of these structural challenges have arisen in the separation-of-powers context, which has experienced a renaissance since 2010. From the President's supervisory powers (2) to appointments of federal officers, (3) from Article III protections (4) to judicial review of administrative action, (5) from delegation of powers to private parties (6) to legislative standing, (7) the Supreme Court of the United States and individual Justices have welcomed structural challenges to the administrative state and Article I courts. (8) Although not sounding in separation of powers under current doctrine, (9) partiality under the Due Process Clause concerns prophylactic limitations that protect adjudicators' independence and, more broadly, cabin how administrative adjudication can occur. (10)

    Administrative adjudication's partiality problem is a worthy candidate to join these claims for three reasons. First, prohibiting administrative adjudicators' partiality, unlike some other structural areas, does not require overruling prior decisions and relies heavily on the Court's recent precedent. Second, partiality challenges fit comfortably within the Court's penchant for formalism and prophylaxes in structural constitutional matters. Indeed, formalism is much more justified for partiality challenges than certain other structural issues and has a longer jurisprudential provenance. Finally, as compared to other proposed challenges to the administrative state, challenges based on administrative partiality are more likely to earn enough votes to succeed. Because finding partiality within the administrative state would likely have significant, widespread disruptive effects, the President, agencies, and Congress should rethink administrative adjudication before courts make them do so.

  2. THE PARTIALITY ARGUMENT AGAINST ADMINISTRATIVE JUDGES

    In a recent article, (11) I contended that certain administrative adjudicators have an appearance of partiality that very likely violates the Due Process Clause. These adjudicators go by many names--such as hearing officer, Immigration Judge, Patent Appellate Judge, or hearing examiner--but are collectively referred to as "Administrative Judges" or "AJs," titles similar to the more well-known Administrative Law Judges or ALJs. (12) The approximately 1600 ALJs and approximately 3300 AJs perform the same function. (13) They preside over trial-like administrative hearings, admit evidence, make credibility determinations, and issue initial opinions after compiling an evidentiary record. (14) In these hearings, agencies, which often appear as parties, can seek to enforce statutory or regulatory provisions by awarding or terminating benefits, issuing or revoking licenses, assessing penalties, or resolving disputes between private parties. (15) Despite their similar names and functions, almost all AJs lack the statutory independence of ALJs. (16)

    Start by contrasting AJs' and ALJs' appointments. All of the nearly 1600 ALJs (17) are appointed under a merit-focused statutory selection process. Although the agency for which an ALJ works directly appoints the ALJ, (18) an independent agency, the Office of Personnel Management ("OPM"), limits the choice to the three highest-scoring candidates based on written examination and other scores. (19) To certain agencies' chagrin, the OPM does not consider candidates' subject-matter expertise but instead seeks to hire generalists. (20) In contrast, an agency's ability to appoint nearly all AJs is not constrained by similar statutory procedures or an independent agency's oversight. (21) At most, agencies may be bound by general Civil Service requirements (22) and use self-crafted hiring guidelines. (23)

    After AJs and ALJs are hired, the Administrative Procedure Act ("APA") protects ALJs, but not AJs, from their agencies in various ways. ALJs must preside over "formal adjudication"--i.e., hearings that are required to be "on the record." (24) With formal adjudication, ALJs cannot perform investigative or prosecutorial functions, nor report to an agency official who does. (25) They generally cannot have ex parte communications with the parties (including agency officials) concerning a fact issue. (26) Agencies cannot give ALJs performance reviews (27) or pay them bonuses. (28) Because AJs, in contrast, cannot preside over formal adjudication, they do not receive formal adjudication's protections. (29) No statute prohibits them from engaging in investigative or prosecutorial functions or reporting to those who do, receiving performance reviews or bonuses from the agencies that appear before them, or communicating with agency officials concerning facts at issue in a pending case. (30) Indeed, based upon the most recent data, 83% of AJs are subject to agency-led performance reviews. (31)

    The key difference between ALJs and AJs concerns their protection (or lack thereof) from discipline and removal. Agencies may discipline or remove ALJs only for "good cause established and determined by the Merit Systems Protection Board [("MSPB")]" after a formal administrative hearing. (32) The MSPB members also enjoy protection from at-will removal because the President can remove them "only for inefficiency, neglect of duty, or malfeasance in office." (33) Contrary to this significant job protection for all ALJs, nearly all AJs lack statutory protection from discipline or removal. (34)

    AJs' lack of statutory protections to shield them from agency oversight likely creates an unconstitutional appearance of partiality based on three related considerations. First, due process applies to administrative adjudication and precludes appearances of partiality, as the Supreme Court so held when considering whether the use of insurance-carrier hearing officers to decide Medicare claims violated due process. (35)

    Second, a litigating party's disproportionate role in appointing a judge before whom it is certain to appear creates an unconstitutional appearance of partiality. This principle comes from Caperton v. A.T. Massey Coal Co., in which the Court held that such an appearance existed when a party with a case pending before the Supreme Court of Appeals of West Virginia provided substantial and disproportionate contributions for the campaign of one of the justices. (36) This scenario implicated the principle that "fears of bias can arise when--without the other parties' consent--a man chooses the judge in his own cause." (37) The Court did not care that the justice denied harboring any actual bias (38) or that voters directly elected the justice. With AJs, agencies do more than indirectly appoint them through disproportionate influence; they directly "choose[] the judge in [their] own cause" without even the oversight of an independent agency, as with ALJ hiring. (39)

    Third, the ability to discipline, remove, or affect the salary of an adjudicator also creates an unconstitutional appearance of partiality. The Supreme Court emphasized in Free Enterprise Fund v. Public Co. Accounting Oversight Board that at-will removal directly affects whether an official is independent: "[O]ne who holds his office only during the pleasure of another cannot be depended upon to maintain an attitude of independence against the latter's will." (40) With AJs, agencies that often appear as parties can discipline, remove, or award bonuses with only limitations that exist under general Civil Service Laws. (41) Together, agencies' appointment and control over AJs likely creates an appearance of partiality that offends due process. Partiality challenges, as I discuss in Parts III and IV, are consonant with due process precedent and structural challenges generally.

  3. CONSISTENCY WITH PARTIALITY PRECEDENT

    Partiality challenges concerning AJs are consistent with the Supreme Court's prior decisions and rely heavily on its most recent decisions. The relevant partiality precedent mostly concerns state adjudicators, but it is consistent with finding that AJs have a due process problem. The Supreme Court decisions that concern administrative adjudicators are either distinguishable or seemingly limited by more recent decisions. (42)

    The two most relevant decisions concerning state judges--Tumey v. Ohio and Ward v. Village of Monroeville--are important because they reveal that pecuniary incentives (whether flowing directly to the adjudicator or a budget that the adjudicator oversees) create an unconstitutional appearance of partiality. (43) Due process takes offense when a "judge... has a direct, personal, substantial pecuniary interest in reaching a conclusion against [a party] in his case." (44) Such an interest existed, the Supreme Court explained in Tumey, when the township and the mayor (as a salary supplement) each received a portion of fees assessed after the mayor decided that the defendant violated Ohio's alcohol-prohibition statute. (45) Likewise, in Ward, the Due Process Clause required a mayor's recusal from certain ordinance- and traffic-violation cases when the assessed fees were a significant portion of the village's revenue but did not augment the mayor's income. (46) For AJs, these decisions indicate that the ability of the party-agency to...

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